Commonwealth v Bogle

89 CLR 229

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(Judgment by: Fullagar J) Court:

Judges: Dixon CJ
McTiernan J
Williams J
Webb J

Fullagar JKitto J
Taylor J

Judgment date: 13 March 1953

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Judgment by:
Fullagar J

Commonwealth and Commonwealth Hostels Ltd v Bogle: This is a case stated by Kitto J. in an action in which the Commonwealth and a company named Commonwealth Hostels Ltd are plaintiffs and one Andrew Bogle is defendant. The claim is a claim for the price of board and lodging and other services and facilities provided for the defendant. The plaintiffs sue in the alternative, alleging that the one or the other of them is entitled to the amount claimed.

From about the end of 1949 the Commonwealth Government provided, as a matter incidental to the carrying out of its immigration policy, a number of hostels for the accommodation of immigrant families. One such hostel is situate at Brooklyn in the State of Victoria, and is known as the Brooklyn Hostel. It consists of a large building, containing seventy rooms, which is erected on land held by the Commonwealth under a lease. The defendant and his wife and child commenced to live at the Brooklyn Hostel on 18th July 1951, and they are still living there. The accommodation provided for the defendant and his wife and child consists of three rooms, two of which are furnished as bedrooms, and the third of which is furnished as a sitting-room. Blankets and bed linen are provided in all the bedrooms in the hostel. Meals are provided for the residents of the hostel in a central dining hall. Electric light and power are provided. There are bathrooms and lavatories and laundries for the use of the residents. The washing of one sheet and one pillow-slip per person per week is done for the residents. There is a playground for children, a first-aid station, and a library. All furniture, furnishings, fittings and equipment in the hostel have at all times been the property of the Commonwealth.

For the accommodation of himself and his family and for the services and facilities mentioned above the charge made to the defendant, up to 27th April 1952, appears to have been at first PD6 13s. 0d. per week and later PD6 18s. 6d. per week. The exact manner in which these sums were calculated need not be considered, but it should be mentioned that the charges made were arrived at on a basis which took into account the earnings of members of a household.

Up to 27th January 1952 the Brooklyn Hostel and the other hostels were managed and controlled by a Department of State of the Commonwealth, the Department of Labour and National Service. On that date a change took place, the effect of which is one of the matters in controversy in this case. Up to that date, however, the position seems clear enough. It was not, I think, contended that the residents of the hostels were tenants. Having regard to the purpose of the hostels, to the character of the services and facilities provided, to the inclusive nature of the charge made, and to the fact that master keys of all the rooms were retained by officers of the Department, it seems clear that they were not tenants but lodgers. And the contracting parties were the Commonwealth and the respective residents of the hostels. In particular there was a contract between the defendant Bogle and the Commonwealth that, in consideration of the Commonwealth providing the accommodation and services and facilities which have been described, he would pay to the Commonwealth the sum of PD6 18s. 6d. per week. It is not necessary, for the purpose of answering the questions in the case stated, to inquire further into the implied terms of the contract, but one would suppose that it was terminable on reasonable notice by either party, and that a week's notice would in the circumstances be reasonable notice.

The change which, as has been said, took place on 27th January 1952 consisted in the taking over of the management and control of the Brooklyn Hostel by the plaintiff company, Commonwealth Hostels Ltd The legal effect of what was done in this connection requires examination, but, before entering upon that examination, it will be convenient to explain why the question is or may be important and to state the contentions of the parties to the action.

On or about 16th April 1952 notice was given to the residents of the Brooklyn Hostel, including the defendant, that, as from Sunday, 27th April 1952, the charges for the accommodation and facilities provided in the hostel would be increased to a specified amount. The amount of the increase in the case of the defendant was from PD6 18s. 6d. to PD8 7s. 6d. For the three weeks commencing on 27th April 1952 and ending on 17th May 1952 the defendant made payments to the plaintiff company at the rate of PD8 7s. 6d. per week, but thereafter, although he remained in occupation, he paid PD6 18s. 6d. only and refused to pay any more. What is claimed in the action is the difference between PD8 7s. 6d. per week and PD6 18s. 6d. per week for the period commencing on 18th May 1952 and ending on 12th September 1952. The writ was issued on 18th September 1952. The prima facie basis of the claim presumably is that a contract to pay at the increased rate for the future is to be inferred from the facts that the defendant remained in occupation and paid the increased rate for three weeks.

The defendant relies on a declaration and a prices regulation order relating to the provision of board and lodging and in force under the Prices Regulation Act 1948-1951 (Vict.), and he also relies on s. 35 of that Act, which provides, so far as material, that no person who is the proprietor of any residential business (as defined) shall charge any person for lodging board and amenities provided at a rate higher than the rate charged at the commencement of that person's period of occupation as a lodger. Section 35 may, in my opinion, be eliminated from consideration at once. I do not think it can be said that either the Commonwealth or Commonwealth Hostels Ltd was the proprietor of a residential business within the meaning of that section. This view, however, does not dispose of the defendant's case, for the prices regulation order on which he relies is quite general in its application and is not limited to persons who carry on a business. If it applies to the present case, its terms will operate to make illegal the raising of the charge for accommodation and facilities provided, which was announced on 16th April 1952.

In the view which I have ultimately taken of this case it is not necessary to decide whether the Commonwealth is bound by the Prices Regulation Act (Vict.). I think I should say, however, that, in my opinion, the Commonwealth is not bound by that Act, and, if I had thought that the Commonwealth, as the party with whom the defendant contracted, was the proper plaintiff in this action, I should have held that the defence to which I have referred failed. To say that a State can enact legislation which is binding upon the Commonwealth in the same sense in which it is binding upon a subject of the State appears to me to give effect to a fundamental misconception. The question whether a particular State Act binds the Crown in right of a State is a pure question of construction. The Crown in right of the State has assented to the statute, and no constitutional question arises. If we ask whether the same statute binds the Crown in right of the Commonwealth, a question of construction may arise on the threshold. In considering that question we are, or should be, assisted by a presumption that references to the Crown are references to the Crown in right of the State only. If the answer to the question of construction be that the statute in question does purport to bind the Crown in right of the Commonwealth, then a constitutional question arises. The Crown in right of the State has assented to the statute, but the Crown in right of the Commonwealth has not, and the constitutional question, to my mind, is susceptible of only one answer, and that is that the State Parliament has no power over the Commonwealth. The Commonwealth-or the Crown in right of the Commonwealth, or whatever you choose to call it-is, to all intents and purposes, a juristic person, but it is not a juristic person which is subjected either by any State Constitution or by the Commonwealth Constitution to the legislative power of any State Parliament. If, for instance, the Commonwealth Parliament had never enacted s. 56 of the Judiciary Act 1903-1950, it is surely unthinkable that the Victorian Parliament could have made a law rendering the Commonwealth liable for torts committed in Victoria. The Commonwealth may, of course, become affected by State laws. If, for example, it makes a contract in Victoria, the terms and effect of that contract may have to be sought in the Goods Act 1928 (Vict.) (see Federal Commissioner of Taxation v Official Liquidator of E. O. Farley Ltd (In Liquidation) ^[F11] , at p. 308 and In re Richard Foreman & Sons Pty Ltd ; Uther v Federal Commissioner of Taxation ^[F12] , at p. 528). But I should think it impossible to hold that the Parliament of Victoria could lawfully prescribe the uses which might be made by the Commonwealth of its own property, the terms upon which that property might be let to tenants, or the terms upon which the Commonwealth might provide accommodation for immigrants introduced into Australia.

On the other hand, if the plaintiff company is the party with which the defendant contracted, and is therefore the proper plaintiff in the action, I should think that, unless some special reason could be found for excluding it from the field covered by the Prices Regulation Act 1948-1951, that company, like any other company in Victoria, was bound by regulations and orders made under the Act. It is necessary, therefore, to consider whether the party with which the defendant contracted (assuming, as the case stated assumes, that he contracted with one or the other) was the Commonwealth or the plaintiff company. This means that we must examine the Constitution of the company and what took place after its incorporation.

The plaintiff company was incorporated, evidently on the initiative of the Commonwealth Government, under the Companies Act 1938 (Vict.) on 13th September 1951. It is a company limited by guarantee, the maximum amount for which a member can be made liable being PD1. Each of the seven signatories to the memorandum and articles is described as a civil servant. Apparently there are not and never have been any other members. The memorandum empowers the company to "provide, acquire, take over, establish, equip, maintain, conduct, control, manage or supervise" hostels for the accommodation of "migrants" and others. It also empowers the company to enter into any arrangement with any Government and to carry out a number of subsidiary "objects". It provides that the income and property of the company shall be applied solely towards its objects, and that no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus, or otherwise howsoever by way of profit, to the members of the company. If there is any surplus on a winding up, it is not to be distributed among the members of the company, but is to be paid to the Minister of State for Labour and National Service to be applied by him in such manner as he may direct. The articles provide that every director is to be appointed by the Minister by writing under his hand and is to hold office on the terms specified in the instrument of appointment. A director is to cease to hold office upon being required in writing by the Minister to resign. The accounts of the company are to be audited by the Commonwealth Auditor-General. The company is to take steps to wind up its affairs upon receiving a written notice from the Minister that such a course is, in his opinion, necessary or desirable.

The lease of the Brooklyn Hostel was never assigned by the Commonwealth to the company, nor was any sub-lease to the company executed, nor was any property of the Commonwealth ever transferred to the company. But on 20th November 1951 a contract in writing was made between the Commonwealth and the company, the terms of which are of great importance. The instrument recited that it was intended that the company should "assume responsibility for managing and conducting the hostels ... now being managed and conducted by the Commonwealth through the Department of Labour & National Service" and also those in course of completion which would on completion have been managed and conducted by the Commonwealth through the Department. It then provided (by cl. 1) that the company should undertake the management and control of such of the hostels as should from time to time be specified by the Minister and should maintain standards of accommodation and service not inferior to those existing at the time of the specification. Clause 2 provided that the Commonwealth should make available to the company by way of loan such funds as should be appropriated by Parliament for the purpose. Clause 3 provided for the employment by the company of officers and employees "now engaged by the Department in the administration management and control of the hostels". Clause 5 provided that the company should, when requested, undertake on behalf of the Department the work of locating sites for and equipping hostels the management and control of which would on completion be undertaken by the company. Clause 6 provided that the company would, on being informed of any accommodation required, ensure that satisfactory arrangements were made for such accommodation. Clause 7 provided that the company would comply with any directions of the Minister as to "the policy to be adopted by the company in carrying out its undertaking as to the management and control of the hostels". By cl. 8 the company, inter alia, undertook (a) to maintain the hostels and the property of the Commonwealth comprised therein in good repair and condition, (b) to furnish information required by the Minister, (c) to permit the Minister or any person nominated by him to inspect "any of the premises under the management or control of the company," (g) not to alter the scales of charges from time to time approved by the Minister for accommodation and facilities provided in the hostels, (h) to supervise, when requested, the erection and equipping "of hostels the management and control of which will on completion be transferred to the company", (i) to close down any hostel "under its management or control" on being requested in writing by the Minister so to do. Clause 9 provided that nothing contained in the instrument should be deemed to confer on the company any right title or interest in any of the real and personal property of the Commonwealth comprised in the hostels. Clause 10 provided that, upon the company undertaking the management and control of hostels specified by the Minister, the benefit of all contracts entered into by the Commonwealth and then existing for the supply of goods and services and the conduct of facilities in connection with the hostels should by force of the agreement thereupon be assigned to the company, which would discharge all obligations and liabilities of the Commonwealth in connection with all such contracts.

The Minister for Labour and National Service at a later date "specified", in accordance with cl. 1 of the contract, a number of hostels, including the Brooklyn Hostel, as hostels of which the company was to undertake the management and control. The date of "taking over" was 27th January 1952, although the "specification" was not formally made until 19th February 1952. It was made by a letter of that date to the chairman of directors of the company, in which the Minister specified the named hostels "as those which I desire the company to manage and control from the date from which I am advised the company will be ready to take over from the Department, viz. 27th January 1952".

On 18th January 1952 a notice was exhibited on notice boards at the Brooklyn Hostel, which commenced: "Residents are hereby informed that in connection with the change over of hostels from the Department of Labour and National Service to the Commonwealth Hostels Ltd a stocktake of all equipment in every room of the hostel has to take place in the next few days". The notice proceeded to give certain information about the "stocktake", and to invite the co-operation of the residents. It was signed "H. G. H. Beeren, Manager, Nos. 3 and 4 Hostel". It came to the knowledge of the defendant Bogle.

On 16th April 1952 the notice which announced the increased charges was exhibited on notice boards at the Brooklyn Hostel. The notice was headed "Commonwealth Hostels Ltd ". It stated that an increase in hostel tariff charges for adults would apply from Sunday 27th April 1952. It then proceeded to announce "the new rates which have been approved by the Commonwealth Government". It was signed "C. R. Thomas, General Manager". It came to the knowledge of the defendant, who, as has been seen, paid the increased charges for the first three weeks after 27th April.

Only two other facts need, I think, be stated. The first is that the payments made by the defendant, after the "taking over" by the plaintiff company, are stated in the case to have been made to the company, and receipts stamped with the stamps required by the Stamps Act 1946 (Vict.) were given therefor in the name of the company. The second is that the defendant was not at any material time aware of the existence of the contract of 20th November 1951 between the Commonwealth and the company.

The object or objects of the Commonwealth Government in incorporating the company and placing in its hands the conduct and management of the hostels can, on the material before us, only be matter for conjecture. Whatever may have been the practical purpose sought to be achieved, it is with the legal effect of what was done, and with that alone, that the Court is concerned. And the important question is whether the company was substituted for the Commonwealth as the party contracting with the defendant in respect of the provision of accommodation and other facilities at the Brooklyn Hostel. In other words, the question is whether a novation took place. If it did, the company is the proper plaintiff. If it did not, the Commonwealth is the proper plaintiff. The question is largely a question of inference from facts proved or admitted. But the case stated expressly states that the parties are unable to adduce further evidence beyond that of which the effect is set out in the case. On that material I do not think that any other conclusion is open than that the company took the place of the Commonwealth as the contracting party with the immigrant boarders or lodgers at the Brooklyn Hostel, and that a novation did take place.

The general effect of the contract of November 1951 is, I think, that in relation to the hostels "taken over" the company is to be substituted for the Department of Labour and National Service-in other words, for the Commonwealth-in relation to hostel accommodation and in relation to persons accommodated in hostels. It was argued that the essence of the agreement was that the company was to "manage" the hostels and that as "manager" it became a mere "servant" or "agent" of the Commonwealth. The argument is not without force, but a little reflection, I think, reveals it as savouring of unreality. It is not difficult to conceive purposes which might be served by the substitution of a new corporate entity for the Commonwealth as the person responsible for the conduct of the hostels, but it seems impossible to conceive any rational purpose that could be served by the interposition of a corporate "manager" between the Commonwealth and the individual managers and servants who must of necessity be employed. There is no reality about the conception of the new corporation as a fellow servant of the Commonwealth with the individual servants employed. In any case the agreement expressly provides (cl. 3) that employees hitherto employed by the Department are to become employees of the company. It is clearly contemplated that the staffs required for running the hostels shall be engaged and paid by the company. The company covenants with the Commonwealth to maintain the hostels and the property of the Commonwealth therein, and to make any necessary replacements (cl. 8 (a) ). In respect of funds provided by the Commonwealth for the company the relation of the Commonwealth and the company is to be that of borrower and lender (cll. 2, 8 (d) ). It is to provide accommodation when required (cl. 7) and to maintain existing standards of accommodation (cl. 1). The provision in cl. 8 (g) that scales of charges are not to be altered without the approval of the Minister clearly contemplates that, in the absence of such a provision, the company could make such charges as it thought fit. Clause 10 expressly provides for the transfer from the Commonwealth to the company of relevant contracts. It may be that, on its true construction, this clause does not in terms include the benefit of existing contracts by residents to pay for their accommodation. But that it was intended that the benefit of such contracts should be included is made plain by the fact that, after the date of the "taking over", payments for accommodation were made by residents to the company, which gave receipts in its own name stamped in accordance with the Stamps Act of the State.

A novation is, of course, a tripartite affair, and the agreement of November 1951 affects the position only as between the Commonwealth and the company. But the "change over of hostels from the Department of Labour and National Service to the Commonwealth Hostels Ltd " was announced to residents of the Brooklyn Hostel on 18th January 1952, and they were informed that "in connection with the change over" a "stocktake" of all equipment in every room would be made. This notification came to the knowledge of the plaintiff, and he thereafter made his payments to the company, which acknowledged them in the manner indicated above. These facts compel the conclusion that a novation took place.

The position now reached is that, as from 26th January 1952, the contract with respect to the accommodation of the defendant at the Brooklyn Hostel is a contract between the company of the one part and the defendant of the other part. In other words, the company, and not the Commonwealth, is the proper plaintiff. The remaining question is whether the Victorian price-fixing orders on which the defendant relies apply to the company.

The Prices Regulation Act 1948-1951 came into force by proclamation on 20th September 1948. Section 4 provided that declarations and orders made under the National Security (Prices) Regulations (which ceased to operate of their own force on 19th September 1948) should have the force of law in Victoria until repealed or amended under the Act. By virtue of this section there was in force in Victoria on 27th January 1952 a declaration of the provision of board and lodging as a "declared service" under the regulations, and a Prices Regulation Order (No. 2426) made under the regulations on 8th February 1946 with respect to the provision of board and lodging. This order, by virtue of a declaration made on 9th December 1947 under the regulations, did not apply to the services supplied or carried on "by State or semi-governmental or local governing bodies". (The exemption was not confined to the provision of board and lodging: it extended to all services supplied by the "bodies" mentioned). Prices Regulation Order No. 2426 (Cth.) remained in force in Victoria until 21st July 1952, when it was superseded by Prices Regulation Order No. 436 (Vict.) made under the State Act. Clause 5 of Prices Regulation Order No. 2426 would, if applicable to the plaintiff company, render illegal the increase in the charge for accommodation to the defendant and his wife and child announced by the company on 16th April 1952.

The first argument submitted for the plaintiff company was that it was exempted from the operation of Prices Regulation Order No. 2426 because it was a "semi-governmental body". It is extremely difficult to attach any precise meaning to this expression. The expression "State bodies" is equally obscure. The remaining expression, "local governing bodies", creates, of course, no difficulty. It seems to me to be unnecessary for present purposes to assign any meaning to the relevant expression. I am disposed to think that, in its context, it contemplates bodies exercising some degree of governmental power. But, in any case, it comes between a reference to State organizations and a reference to bodies which are the creatures of State laws, and I would read it as referring exclusively to bodies which have some sort of relation or "semi-relation" to a State and as having no reference to the Commonwealth or any Commonwealth "bodies". When the order was in force under the National Security Act 1939-1946, the reference would, of course, be to any State. When it ceased to operate under that Act and became an expression of the will of the Parliament of Victoria, it may be that it should be regarded as referring to Victoria only.

The other argument for the plaintiff company was that it was exempt from order No. 2426 by reason of the relation of the company to the Crown in right of the Commonwealth. The matter was treated for the most part as a question of construction. The defendant's counsel referred to s. 37 (2) (e) of the Prices Regulation Act, which provides that nothing in Pt. III of the Act shall prevent any transaction to which the State or the Commonwealth is a party. Part III relates to transactions in land. It is Pt. II of the Act that relates to the fixing of prices for goods and services, and Pt. II contains no such provision as s. 37 (2) (e). It was said, therefore, that Pt. II ought to be construed as applying to the State and to the Commonwealth. By way of answer to this argument the company relied on the rule that the Crown is not bound by statute unless an intention to bind it appears expressly or by clear implication. It said further that it stood in a particular relation to the Crown-that is, of course, the Crown in right of the Comwealth-and it relied on what it called "the shield of the Crown".

I have already stated my opinion that a State has no power to bind the Commonwealth by such legislation as that which is contained in the Prices Regulation Act. And I would frame the final question arising on this case stated by asking:is the company's relation to the Commonwealth such as to identify it with the Commonwealth and place it constitutionally in the same position as the Commonwealth with regard to the application of the Prices Regulation Act? If we must employ metaphors, it would be more appropriate to speak of the "shield of the Commonwealth", though I would not, of course, deny the relevance of the numerous authorities dealing with what has been called the "shield of the Crown".

I do not think it necessary to discuss at any length the question raised by the company's contention, because it seems to me impossible to say that the company is the Commonwealth, or is entitled, by reason of any relation which it has with the Commonwealth, to claim immunity from the provisions of the Victorian Act. In such cases as Grain Elevators Board (Vict.) v Dunmunkle Corporation ; Victorian Railways Commissioners v Herbert ^[F14] and Rural Bank of New South Wales v Hayes a statutory corporation is involved, and the question must turn partly on the effect of the incorporating statute and partly on the construction of the statute from which exemption is claimed, though other matters may also be material. In such cases as Marks v Forests Commission ^[F16] we have a statutory corporation claiming to share the immunity of the Crown at common law from liability in tort. I must say that, with the greatest respect to the learned judge who decided it, I cannot think that that case was rightly decided. But, however this may be, in the present case we have no incorporating statute in which implications may be found. Here we have simply a company formed in the ordinary way under the Companies Act of the State, and functioning as such within the legal system of the State. On its face the Prices Regulation Act obviously applies to every such company which supplies board and lodging for reward, and there is no other statute to construe. It sues in its own right as a party to a contract a person who has contracted with it. The contract alleged is one which is made illegal by the State Act. What reason can there be for saying that the statute is inapplicable? The company is not the Crown in right of the Commonwealth. It has no right to sue on behalf of the Crown in right of the Commonwealth. It seems to me sufficient to paraphrase what I said in Rural Bank of New South Wales v Hayes ^[F17] , and to say that the Act does not affect rights of the Commonwealth, but the rights asserted by the company in these proceedings are simply not rights of the Commonwealth. It is said that the company was formed at the instance of the Commonwealth, that the Commonwealth through the Minister is in a position under the articles to control the company, and that the ultimate financial interest is that of the Commonwealth. But none of these things can affect the legal character of the company as a person suing in the courts. If the company were a company limited by shares, it could make no difference that the Commonwealth held ninety-nine per cent of the shares. It is said (with perhaps more force) that the company is in possession and control of property of the Commonwealth, and that its activities are activities in which the Commonwealth, in the course of the exercise of the immigration power, is vitally interested. But again I am unable to regard these matters as affecting in any way the legal nature of the company. Having been incorporated under the Companies Acts of the State, it seems to me that it must be subject to the Companies Acts and all other State legislation which in terms applies to such companies. It may be that the Commonwealth Parliament could, under s. 51 (xxvii.) and (xxxix.) of the Constitution, enact legislation conferring immunities on the company and prevailing over State legislation by virtue of s. 109. But no such question need be considered, because no such legislation has been enacted.

I ought to mention in conclusion the case of Roberts v Ahern , which might be thought to lend support to the argument of the company. In Pirrie v McFarlane ^[F19] , at p. 213, Higgins J. included Roberts v Ahern ^[F20] in a list of cases which he regarded as highly dubious since the Engineers' Case . In West v Commissioner of Taxation (N.S.W.) ^[F22] , at pp. 696-697, Evatt J. quotes this passage (including the reference to Roberts v Ahern ^[F23] , as illustrating the "numerous and startling applications" of the general doctrine of immunity of instrumentalities before it was overthrown. Roberts v Ahern ^[F24] is indeed, I think, to be regarded as representing an extreme application of that overthrown doctrine. think that the Commonwealth is properly made a party to the action, and that this Court therefore has jurisdiction under s. 75 (iii.) of the Constitution. Having such

1.

Is it open to me on the facts and documents aforesaid to find that the payments which the defendant became liable to make for the accommodation and other benefits provided as abovementioned during the period from 18th May 1952 to 13th September 1952, both inclusive, were payments-(a) of rent, within the meaning of the Landlord and Tenant Act 1948 (Vict.), or (b) for a declared service, within the meaning of the Prices Regulation Act 1948-1951 (Vict.)?

2.

If question 1 (a) be answered, yes, and I find that the said payments were payments of rent within the meaning of the said Landlord and Tenant Act 1948, was the amount thereof affected in any and what manner by the operation of that Act?

3.

If question 1 (b) be answered, yes, and I find that the said payments were payments for a declared service within the meaning of the said Prices Regulation Act 1948-1951, was the amount thereof affected in any and what manner by the operation of that Act and the declarations and orders mentioned in par. 34 of this case or any of them?

4.

Is it open to me on the facts and documents aforesaid to hold that the amount of the payments which the defendant became liable to make in respect of the said period was affected in any and what manner by the operation of s. 35 of the said Prices Regulation Act?

5.

Has the defendant's knowledge or belief as to the nature or extent of the relationship between the plaintiff the Commonwealth of Australia and the plaintiff company at any time any and what materiality to the question whether either of the plaintiffs is entitled to judgment in this action?

6.

If, having regard to the answers to the preceding questions, the defendant is liable to pay in respect of the said period an amount in excess of that which he has already paid, is the excess amount owed to the plaintiff the Commonwealth of Australia or to the plaintiff company?

7.

If the excess amount is owed to the plaintiff company, has this Court jurisdiction to give judgment for the plaintiff company in this action?

These questions should, in my opinion, be answered as follows:

1.(a)

No.

1.(b)

Yes.

2.

It is unnecessary to answer this question.

3.

The effect of the Prices Regulation Act 1948-1951 is to make illegal any contract by the defendant to pay to the plaintiff company the amounts claimed. The case does not disclose any relevant contract between the defendant and the plaintiff Commonwealth.

4.

No.

5.

No.

6.

See answer to question 3.

7.

The Court has jurisdiction in the action.

Commonwealth and Commonwealth Hostels Ltd v Clark: In this case the defendant is a resident of a hostel known as the Finsbury Hostel in the State of South Australia. The land on which this hostel stands is held by the Commonwealth under a lease. The plaintiff company was on 31st January 1952 registered under Pt. XII of the Companies Act 1934-1939 (S.A.) as a company incorporated in Victoria and carrying on business in South Australia. The Finsbury Hostel, which was originally opened by the Commonwealth on 20th December 1949, was among the hostels "specified" by the Minister for Labour and National Service as a hostel the management and control of which was to be taken over by the company as from 27th January 1952.

The defendant and his wife commenced to live at the Finsbury Hostel on 16th April 1952. From that date up to 26th April 1952 he was charged and paid in respect of himself and his wife PD5 13s. 0d. per week. On or about 18th April 1952 he was notified that the charge would be increased, for the week commencing 27th April 1952 and thereafter, to PD6 17s. 0d. per week. The defendant refused to pay, and has never paid, the increased rate. The claim made in the action is for the difference between the amount of the increased charge notified to the defendant and the amount actually paid by him in respect of the period from 27th April 1952 to 6th September 1952. The writ was issued on 18th September 1952.

The facts of this case differ in two respects from the facts in Commonwealth and Commonwealth Hostels Ltd v Bogle and Commonwealth and Commonwealth Hostels Ltd v Boreham. In the first place, the defendant in this case, unlike the defendants in the other two cases, did not make any payment at the increased rate which was demanded as from 27th April 1952. Whereas both Bogle and Boreham continued to reside at their respective hostels and paid the increased charge for the first three weeks, Clark, though continuing to reside at the Finsbury Hostel, has at all times refused to pay at a rate higher than that which he was charged when he went to live there on 16th April. The second difference is this. Whereas both Bogle and Boreham originally went into residence at a time when their respective hostels were under the administration of the Department of Labour and National Service, Clark went into residence at the Finsbury Hostel at a time after the company had taken over the management and control of that hostel.

With questions raised by the first matter of difference the case stated by Kitto J. is not concerned-or at any rate not directly concerned. The difference, however, may render the questions asked by the case stated academic for the time being. The claim of either plaintiff, in each of these cases, must rest on contract. Unless contracts can be established whereby the respective defendants promised to pay whatever reasonable charge might from time to time be fixed by the Commonwealth or the company, it will be necessary for the plaintiffs to prove in each case a contract whereby the defendant promised to pay the increased charge. In the cases of Bogle and Boreham it may well be right to infer the making of such a contract from the remaining in occupation plus the making of payments at the increased rate. But Clark, though he remained in occupation, made no payments at the increased rate, and his mere remaining in occupation seems quite equivocal. It is quite consistent with his saying:"I will not pay, or promise to pay, at the increased rate. I realise that, if I do not, you may give me a week's notice and then turn me out, but I intend to stay here, and pay under our existing contract, until you do turn me out". There would seem to be no reason why he should not say this. The mere unilateral announcement that the charges are to be increased would operate not as a rescission of an existing contract but as an offer to make a new contract. The well known principle of Davenport v The Queen ^[F25] would seem to be incapable of application to such a case. That principle rests on election: see Craine v Colonial Mutual Fire Insurance Co Ltd ^[F26] , at pp. 324, 325. Here the position would seem simply to be that an offer is being refused by Clark, the offeror being left to its rights under the existing contract if it chooses to exercise them. It seems proper to draw attention to these matters, but, as I have said, they do not arise on the case stated.

The second difference between the case of Clark on the one hand and the cases of Bogle and Boreham on the other hand is a matter which might affect the answers to the questions in the case stated, but, in the view which I take, does not. The view which I take in the cases of Bogle and Boreham is that the original contracts were between the Commonwealth and the respective defendants, but that in each case there was a novation discharging those contracts and substituting the company for the Commonwealth as the party contracting with the defendant. In those cases the original contract was made before the company took over the management and control of the hostels: in Bogle's case it was made before the incorporation of the company. In this case of Clark the original contract was made after the company had taken over the management and control of the Finsbury Hostel. That original contract was, in my opinion, a contract between the defendant and the company. My reasons for this conclusion will appear from what I have said in Bogle's Case.

The effect of the relevant price-fixing legislation in force at the material time in South Australia is the same as that of the corresponding New South Wales legislation.

The questions asked by the case stated are the same as those asked in Boreham's Case, and they should, in my opinion be answered in the same way.

The Commonwealth and Commonwealth Hostels Ltd v Boreham: In this case the defendant is a resident of a hostel known as the Bunnerong Hostel in the State of New South Wales. The plaintiff company was on 30th January 1952 registered under Pt. VI of the Companies Act 1936-1940 (N.S.W.) as a company incorporated in Victoria and carrying on business in New South Wales. The Bunnerong Hostel, which was originally opened by the Commonwealth on 1st April 1950, was among the hostels "specified" by the Minister for Labour and National Service as a hostel the management and control of which was to be taken over by the company as from 27th January 1952.

The defendant commenced to live with his wife and two children at the Bunnerong Hostel on 16th October 1951. From that date up to 26th April 1952 he was charged and paid in respect of himself and his family PD9 1s. 6d. per week. On or about 18th April 1952 he was notified that the charge would be increased for the week commencing 27th April 1952 and thereafter to PD10 10s. 6d. per week. For the week commencing 6th July 1952 and subsequent weeks the charge was reduced to PD10 0s. 0d. per week, the reason being that the defendant's wife ceased to be in employment. The defendant paid the increased charge for the three weeks ending on 17th May 1952, and thereafter refused to pay at a rate higher than the old rate. The claim made in the action is for the difference between the amount of the increased charges notified to the defendant and the amount actually paid by him in respect of the period from 18th May 1952 to 20th September 1952. The writ was issued on 1st October 1952.

The facts of this case are indistinguishable from those in the case of Commonwealth and Commonwealth Hostels Ltd v Bogle, in which I have already expressed my views, and the effect of the relevant price-fixing legislation is precisely the same, except that the Prices Regulation Act 1948-1949 (N.S.W.) contains no provision corresponding to s. 35 of the Victorian Act.

The questions asked by the case stated are as follows:

1.

Is it open to me on the facts and documents aforesaid to find that the payments which the defendant became liable to make for the accommodation and other benefits provided as abovementioned during the period from 20th April 1952 to 20th September 1952, both inclusive, were payments-

(a)

of rent, within the meaning of the Landlord and Tenant (Amendment) Act, 1948-1951 (N.S.W.), or

(b)

(b) for a declared service, within the meaning of Prices Regulation Act 1948-1949 (N.S.W.)?

2.

If question 1 (a) be answered, yes, and I find that the said payments were payments of rent within the meaning of the said Landlord and Tenant (Amendment) Act 1948, as amended was the amount thereof affected in any and what manner by the operation of that Act?

3.

If question 1 (b) be answered, yes, and I find that the said payments were payments for a declared service within the meaning of the said Prices Regulation Act 1948, as amended, was the amount thereof affected in any and what manner by the operation of that Act and the declaration and orders made thereunder or any of them?

4.

Has the defendant's knowledge or belief as to the nature or extent of the relationship between the plaintiff the Commonwealth of Australia and the plaintiff company at any time any and what materiality to the question whether either of the plaintiffs is entitled to judgment in this action?

5.

If, having regard to the answers to the preceding questions, the defendant is liable to pay in respect of the said period a sum in excess of that which he has already paid, is the excess amount owed to the plaintiff the Commonwealth of Australia or to the plaintiff company?

6.

If the said excess amount is owed to the plaintiff company, has this Court jurisdiction to give judgment for the plaintiff company in this action?

These questions should be answered as follows:

1.(a)

No.

1.(b)

Yes.

2.

It is unnecessary to answer this question.

3.

The effect of the Prices Regulation Act 1948 is to make illegal any contract by the defendant to pay to the plaintiff company the amounts claimed. The case does not disclose any relevant contract between the defendant and the plaintiff Commonwealth.

4.

No.

5.

See answer to question 3.

6.

The Court has jurisdiction in the action.